a) A planner in a small, open economy has a utility function U = x1X2 and production takes place according to the production functions Y1 = 10L1 – 0.5L = 10L2 – L The world prices of the goods are p1 = 10 and P2 = 5. The total amount of labour available in the economy is 5 units. (i) Formulate the Lagrange equation. (ii) Write down the Karush-Khun-Tucker conditions. (iii) Determine a possible solution.

Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( III ) identify three ways by which the economy can attain the level of production outside the production possibility frontier. ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes  ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice…

Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes  ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. (vii) mention two conditions…

Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , drawthe economy's production possibility frontier on hindsight of the relevant assumption and why the points outside the frontier unattainable?.

An endogenous variable is a variable explained by an economic model. An exogenous variable is a variable that is taken as given and is not explained by an economic model. True O False

Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: Why are points outside the frontier unattainable?

Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the law of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions:vi. Assume now that the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier.

Explain the economic reason for which consumption decisions are graphically represented as a straight line and production decisions are graphically represented as a curve.

Why would you rather use real variables in an economic analysis

Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions:  Identify three ways by which the economy can attain the level of production outside the PPF.